Report: Dark Money Surges in State and Local Elections

Report: Dark Money Surges in State and Local Elections

Undisclosed political spending is both more pronounced and more influential at the state and local level than it is in federal elections, concludes a new report by the Brennan Center for Justice at New York University’s School of Law.

Also on the rise in state elections is what the report calls “gray money”—money that moves from one outside spending group to another, and can’t be immediately traced. Many political committees that are technically required to disclose their donors simply report receipts from other PACs or outside groups, the report found, obscuring the original funding source.

“Too often, even transparency is not fully transparent,” report co-author and Brennan Center senior counsel Chisun Lee told the Prospect.

The biggest source of undisclosed “dark” money is politically active tax-exempt groups, which operate outside the disclosure rules, and whose expenditures have exploded since the Supreme Court’s 2010 Citizens United ruling to lift all limits on independent political spending. The report focused on six states—Alaska, Arizona, California, Colorado, Maine, and Massachusetts—where fully transparent outside spending plummeted from 76 percent in 2006 to merely 29 percent in 2014.

One of the biggest jumps was in Arizona, where undisclosed spending spiked from $600,325 in 2010 to $10.3 million in 2014. The report cites numerous examples of big-spending outside groups that wielded disproportionate influence on local decision-making involving such matters as electricity rates, rent control, and environmental regulations. In Arizona, for example, a state initiative to subsidize energy efficiency through solar panels was weakened after the state’s largest utility poured $3.2 million into ads whose funding source was undisclosed.

“For a relative pittance—less than $100,000—corporations and others can use dark money to shape the outcome of a low-level race in which they have a direct stake,” wrote Lee and Brennan Center deputy director Lawrence Norden in a New York Times op-ed unveiling the report.

The report underscores the overwhelming influence that unrestricted and often undisclosed outside spending wields in elections, despite speculation that big money may not matter so much given the millions that many high-dollar super PACs spent fruitlessly on losing primary hopefuls in this presidential race.

The Brennan Center report, titled “Secret Spending in the States,” points to one bright spot amid the rise in undisclosed political spending: the success of state disclosure laws, most notably in California. State efforts to improve political disclosure have rung alarm bells among conservatives, who argue that such efforts are designed to chill speech and will subject donors to harassment and intimidation. But Lee argues that disclosure laws in California and elsewhere strike a proper balance.

“It is possible to require transparency across the board,” says Lee, “but have reasonable accommodations for speakers who can show they have a genuine reason to be fearful.”